Surplus Fund
Surplus refers to an excess or extra amount beyond what is needed or expected. In the context of finances, a surplus typically refers to a positive balance or extra funds remaining after all expenses have been paid.
This surplus can be saved, invested, or used for other purposes such as paying off debts or making additional purchases. Having a surplus is generally considered favorable as it indicates financial stability and the ability to handle unexpected expenses or pursue additional opportunities.
Establish or increase your surplus (emergency) fund to cover unexpected expenses or financial shock. This fund should have at least 3 to 6 months living expenses. As we know that life is unpredictable and unexpected expenses can arise at any time, such as medical emergencies, car repairs, or sudden job loss.
Having a surplus fund ensures you’re prepared to handle these situations without relying on high-interest debt or depleting your regular income.
A surplus fund provides a buffer against financial instability. It can help you cover your expenses during periods of reduced income, such as job transitions or economic downturns, without disrupting your lifestyle or dipping into long-term savings.
Utilize surplus funds to expedite debt repayment, saving on interest payments and hastening your path to becoming debt-free. This enhances financial health and frees up resources for future saving, investing, and increased purchasing power.. This can improve your financial health and free up more resources for saving and investing in the future. This also can increase your buying power
Whether it’s buying a home, starting a business, or retiring comfortably, having a surplus fund allows you to save and invest towards your long-term financial goals without sacrificing your current lifestyle.
Knowing you have a financial cushion can reduce stress and anxiety about money matters. It provides a sense of security and confidence in your ability to handle unexpected challenges and pursue your aspirations.
Having extra cash on hand gives you the flexibility to seize opportunities as they arise, whether it’s investing in a promising opportunity, taking advantage of a discounted purchase, or pursuing further education or personal development.
Overall, having a surplus fund is a fundamental aspect of financial wellness, providing stability, flexibility, and the ability to pursue your financial goals with confidence.
